* Chicagoans love to boo politicians at public events. As I noted in comments earlier, I took my brother to Blues Fest many years ago and he was surprised to hear Harold Washington roundly booed. I had to explain the tradition.

But the reception for Gov. Pat Quinn at the Blackhawks victory rally today appeared to go beyond the normal tradition. If the embed doesn’t work (it doesn’t for some people), then click here to watch…

* Marc Joffe over at Real Clear Markets has a must-read piece on Illinois and the bond rating agencies…

With all the bad news about state pensions, how can one possibly conclude that Illinois bonds are not as risky as rating agencies and the markets seem to think? The reason for the different conclusion is the confusion produced by the rating scales themselves.

As I report in the study, Illinois last defaulted on bond payments 170 years ago. In fact, no state has defaulted on general obligation bonds since 1933, and most states weathered the Depression scot-free. This means that state general obligation bonds have a very strong historical track record.

How does that compare to other types of bonds-especially those rated AAA? In the years before the financial crisis, rating agencies assigned AAA ratings to tens of thousands of mortgage-backed securities and collateralized debt obligations. At the time, these asset classes had only been in existence for 20 years or less, so none of these types of “structured finance” obligations had established a payment record comparable to state general obligations.

During the crisis, many of these AAA-rated structured finance bonds defaulted, yet states continued to pay their general obligation bondholders on time and in full. Today, issuance of structured finance assets is rebounding and many still receive AAA ratings-yet Illinois bonds are thought to be so risky that they merit only a single A. Notably, this ratings inconsistency doesn’t only involve structured finance. Some kinds of companies also seem to be rated more leniently. Perhaps the strangest example of this phenomenon involves companies that insure municipal bonds.

Before the crisis, Ambac and FGIC-two municipal bond insurers-were rated AAA. During the crisis, both went bankrupt. A third AAA-bond insurer, MBIA, was downgraded well into the “B” range-substantially below where Illinois sits today. In the pre-crisis world, these firms rented their AAA ratings to states and cities. Government bond issuers would pay the insurers a premium to guarantee payment on their bonds; allowing their debt to trade as if it were AAA rated.

It was a great business for the bond insurers, since so few municipal bonds defaulted. In fact, these companies felt so confident about the safety of government bonds that they levered themselves to the hilt. According to hedge-fund titan Bill Ackman, MBIA had 139 times more insurance than capital back in 2002. Ackman tried to convince rating agencies to downgrade MBIA, but his arguments fell on deaf ears.

The municipal bond insurance industry might have survived the financial crisis and continued to profit from the misalignment of municipal and corporate ratings if the companies had stuck to their core government bond business. Instead, they diversified into insuring structured finance securities-perhaps becoming bedazzled by the inflated ratings of these instruments. Ultimately it was defaults among insured mortgage-backed securities that marked the undoing of these formerly AAA rated firms.

Returning to my findings, I don’t dispute that Illinois has uniquely bad fiscal policies and the worst outlook of any state. However, because of constitutional limitations, most states have relatively little debt. Illinois’ state debt is only 6 percent of economic output; the analogous ratio for the federal government is 74 percent. Pension underfunding is a serious issue, but because state workers and teachers only account for about 2 percent of the Illinois’ population, it is a much more limited problem than the underfunding of social security and Medicare at the federal level. Finally, unlike depressed cities such as Detroit, a large state such as Illinois has a very diverse and growing revenue base.

Just as the worst swimmer at the Olympics is probably better than anyone at the neighborhood pool, the worst state bonds are probably a lot safer than bonds issued by entities that can’t guarantee revenue by taxing their customers. If rating agencies are going to rate the Olympian and the weekend warrior on the same scale, they need to keep this in mind.

This is, by the way, the same, basic argument that our commenter Wordslinger has been making here for years.

Most people would call that a pretty sweet gig— unless you’re the one footing the bill. […]

One of those committees was the Small Business Empowerment & Workforce Development Committee chaired by state Rep. LaShawn Ford, D-Chicago.

Ford’s committee considered no bills this year and met for discussion purposes only.

And yet he was paid $10,327 to chair the committee. State Rep. Michael Tryon, R-Crystal Lake, who was the Republican spokesman on the committee, also received $10,327 for serving on the board that voted on nothing.

“I would chair this committee— even if I didn’t get paid,” Ford told INN in a recent interview. “I think committee chairmen ought to get paid more because they do more work. “

He added that because he also chairs the Restorative Justice Committee he would be collecting a $10,327 chairman stipend anyway. Only one chairman stipend is given out per year— even if a representative chairs more than one committee.

Ford is under federal indictment for bank fraud.

Ford is right. He chairs two committees. So, to highlight this as the only example of a committee chairman who allegedly got paid to do nothing is ridiculously unfair, since Ford’s other committee did quite a bit of work this year. Was it because he’s under indictment? Sure looks that way. But what does that have to do with the story, other than to undercut the guy and/or the process?

* We all know how difficult the Democrats have had it this year here, despite their super-majority status. Well, Governing.com took a look at three GOP legislatures which have also struggled with super-majority status. First up, Tennessee…

The last day of Tennessee’s 2013 legislative session wasn’t a day that the state’s political leadership will remember fondly. It was a day of revolt and revenge in the legislature. Republican factions fought with one another. The house fought the senate. Very little was accomplished, leading to widespread complaints that scarcely anything of importance had been achieved in the entire three-month session.

Lt. Gov. and Speaker of the Senate Ron Ramsey spent the whole session working on a bill to redraw state judicial districts, something that hadn’t been done since 1984. But when the bill moved across the hall to the house, Ramsey’s own Republicans repudiated it. They said it had been rammed down their throats. Some 40 of them voted no, consigning it to a 66-28 defeat. Then, in retaliation, Ramsey and the senate killed a house bill that was supposed to pass easily, a bill making it less difficult for the state to approve charter schools. By the end of the day, members on opposite sides were scarcely speaking to one another. About the only group happy with the debacle was the legislature’s relatively small cadre of Democrats. “The result could not have been better for the people of Tennessee,” one said.

Asked what he thought of all this, Republican Gov. Bill Haslam gave the legislative session about the faintest praise imaginable: “I certainly wouldn’t call it a waste of time.” Haslam had his own reasons for being miffed at how the legislature had handled itself. One of his top priorities for the session had been a bill creating school tuition vouchers for impoverished students. The senate and house passed it, but added a bunch of riders. Haslam said the resulting bill wasn’t what he had in mind, and pulled it from consideration. No voucher program became law this year in Tennessee. […]

“It’s easier to hold your party together when your majority is small,” Vanderbilt political scientist Bruce Oppenheimer told a reporter at the end of the Tennessee session. “As it gets larger, it gets harder to control.”

House Speaker Tim Jones started the year with a single-minded priority: changing the state’s education rules to make teacher evaluations contingent on student performance. The GOP house majority wouldn’t give it to him. So Jones dumped two members of his caucus who refused to vote with him on education and scaled down his bill so that it would apply only to school principals. He still didn’t get what he wanted. Meanwhile, house and senate Republicans continued to argue over tax credits for economic development.

When incoming GOP Gov. Mike Pence began promoting a 10 percent income tax cut as the central item on his legislative agenda, Republican lawmakers made it clear they weren’t going along. For one thing, they said they weren’t sure the state’s budget could handle the revenue loss. But for another, they weren’t willing to ram it through on a partisan basis.

Madigan said she had supported legislation that would give law enforcement more leeway to issue concealed carry permits — so-called may-issue legislation — rather than the way the compromise was written. The measure awaiting Quinn’s action puts the onus on law enforcement to deny a permit, which is known as shall-issue.

Still, she said, lawmakers “put in a lot of good protections in it, including increased mental health reporting (and) a very good list of where you cannot carry a concealed weapon.”

She noted, however, that restaurant owners have been lobbying Quinn over a provision that would allow people to carry concealed firearms into their establishments if at least half of their revenues do not come from alcohol sales. She also said restaurant groups don’t want to display signs to say they prohibit carrying concealed firearms.

But Madigan dodged on whether she would sign the compromise legislation if she were governor, saying she did not want to inject politics into the issue. She said she expected Quinn to act on the bill by early next week.

That’s another reason why she doesn’t want to announce anything yet. Candidates often prefer to let hot-button issues play out before they jump in.

State Sen. Bill Brady, a Republican who announced his gubernatorial bid this week, questioned why the committee didn’t have a concrete plan, but said he didn’t have one either when [Chairman Kwame Raoul] asked committee members.

His first political foray downstate since this month’s announcement of his candidacy will come today, when he attends a Madison County fundraiser with former Judge Ann Callis, who is running for Congress.

* David Axelrod says the obvious: Attorney General Lisa Madigan’s father issue is gonna be a big problem if she runs for governor…

“I think Lisa is a tremendous public official. I have a maximum high regard for her,” he said. “I think this is a genuine problem. I think it’s one she has to resolve before she makes a decision.”

How she resolves it is between her and her father, he said.

“I think as talented and as strong a candidate as she is, it’s going to be hard to make the case that the governor and the Speaker of the House can be father and daughter . . . particularly when the Speaker is as powerful as this Speaker is,” he said. “People want the branches of government to be independent. No matter what your intentions, it’s going to be very hard for them to persuade people that’s going to be the case. I think it’s an issue for her to resolve. I’m sure there are many reasons for her to consider running but this seems like an issue for her to resolve.”

It was difficult to think of a politically palatable scenario where Michael Madigan remained in his position while his daughter ran for governor, Axelrod said.

“I think that’s very hard, I really think that’s really hard,” Axelrod said. “I say that without a trace of animus at all. I really admire her, I like her, she’s a great person and great political official.”

It was a real problem in 2002, when she ran for attorney general, but the decision was made to forge ahead regardless. It’ll be an even bigger problem now. The question is, does she want to deal with such a brutal campaign.

* For her part, at least publicly, AG Madigan says her father can stay right where he is…

Madigan, after serving on a panel Thursday hosted by the influential Emily’s List at Willis Tower, was unequivocal when posed the question now being constantly raised. “He wouldn’t have to. He wouldn’t have to step down,” she retorted to a reporter, emphasizing the move would not be a requirement.

Asked then — if not a requirement — whether she believed he should step down should she make a 2014 gubernatorial bid, Madigan was more cagey.

“I’m not going to give my father political advice,” she said.

* I’m gonna give you the same advice I gave to subscribers this morning. Do not read too much into the tea leaves and ignore the rumors. Nothing is confirmed so far. Just let it play out.

Moderated by MSNBC’s Karen Finney, [the “Strength in Numbers: Women Leading the Way,” forum] was a frank and intimate discussion of the challenges facing women running for and managing life in political office, by a group dedicated to increasing their numbers nationwide.

On stage, Madigan was asked by Finney the other frequent question. Will she run?

“Well, here’s what I will say. First and foremost, there are other pieces of this that are absolutely a necessity if you’re a woman, and that is the support of other women. I’m very lucky that that base is there,” Madigan responded.

“In terms of decision-making, a lot of fundraising is going on, and now I have a treadmill in my office so I can walk as I make those calls. Yes, you will have a decision sooner rather than later,” she said. […]

“Emily’s has been proud to support Lisa from the beginning. We think she’s done a fantastic job as attorney general, and we do think she would make a fantastic governor,” Schriock said.

Sneed hears Illinois Attorney General Lisa Madigan, who continues to be the recipient of big bucks fundraisers, has told people privately she plans to wait another four years to run for governor.

Isn’t that because her father, powerful Illinois House Speaker Mike Madigan — who is considered a political liability for her — has no intention of retiring in the near future? Betcha.

Isn’t that a sigh of relief Sneed is hearing from Dem gubernatorial hopeful Bill Daley? Betcha.

I heard the same rumor yesterday, and worked it but was unable to find anyone she’d talked to.

That LMadigan revelation, by the way, was the third Sneedling down, behind two Blackhawks-related items.

I love Sneed. Truly, I do. She’s invaluable. But what she wrote today is just a rumor at this point.

*** UPDATE *** After some commenters wondered aloud where AG Madigan was using a treadmill to make campaign calls, I checked with her office and was told the treadmill is at her campaign office. So, there ‘ya go.

* The Tribune recently ran this story about pension reform and Gov. Pat Quinn…

During the past 14 months, Quinn has made a dozen or so major pivots on the pension reform issue. He’s also twice called lawmakers into special sessions. So far the state’s chief executive has come up empty while Illinois’ public pension debt is set to eclipse $100 billion by the end of the month.

* A buddy of mine with way too much time on his hands forwarded me the following, which traces the history of the governor’s stance on pension reform. I’ve done this before, but this timeline has even more links for your perusal…

“It shouldn’t take that long really. It’s something that everybody’s talked about all year,” Quinn said. “We just cannot postpone this matter any longer. It isn’t an election calendar that we’re looking at here, I think some members may be in the legislature. But we’re dealing with the bond rating agencies.” He said that if lawmakers don’t pass pension reform soon, the state may face a downgrade of its credit rating. “If we don’t act, we’re asking for trouble.”

* Feb. 6, 2013 (transcript, via governing.com): In his State of the State speech, Quinn declares support for Senate President John Cullerton’s Senate Bill 1 – then a hybrid of the “House plan” and the president’s choice model, with the choice model taking effect if the House plan was declared unconstitutional.

“President Cullerton, thank you for recognizing this, and thank you for your leadership in providing us a path forward through Senate Bill 1, a comprehensive bill that stabilizes our pension systems and fixes the problem.

And thank you, Leader Tom Cross and Representative Elaine Nekritz for working together on a bi-partisan basis to make sure that pension reform is Job One for this General Assembly.

I urge all of you to be part of the solution. And while refinements may come, Senate Bill 1 is the best vehicle to get the job done.”

“With the passage of this comprehensive pension reform solution, Illinois is closer than ever to addressing a decades-long problem that is plaguing our economy, our bond rating and the future of our children,” Quinn said.

“I was very impressed by the fact that the principles I annunciated more than a year ago for comprehensive pension reform were contained in [Madigan’s bill], and that passed the House last week. And I want to make sure [the bill] gets a vote in the Senate by the end of the month,” Quinn told reporters after a ceremony honoring the state’s firefighters in Springfield.

* May 30, 2013 (Reuters): After the Senate votes down the House plan (SB 1), Quinn says, “The people of Illinois were let down tonight.”

“The people of Illinois are frustrated with the failure of the legislature to enact a comprehensive public pension reform bill,” Quinn said following a nearly two-hour long meeting with legislative leaders on Friday. “So as governor of Illinois I am prepared to do whatever necessary to get this bill on my desk. But they are the legislature. They have to do their job so I can do mine. Their job is unfinished. And we’re going to keep pushing them and pushing them until they do their job.”

If you’re heading to the Pride Parade this weekend, you might be tempted to boo some of the state politicians who’ll be marching.

If you want to boo them for screwing up the state’s finances, then go right ahead.

But don’t jeer because the marriage equality bill failed to pass the General Assembly.

First of all, the people who stopped the marriage bill won’t even be at the parade, let alone marching in it. The politicians marching in front of you on Sunday are on your side. They support marriage equality or they wouldn’t be there.

The Illinois Senate passed the gay marriage bill by a wide margin back in February, so there’s no need to boo any marching state senators. The bill came up short in the House, and while mistakes were surely made, those to blame are the state representatives who opposed the bill, not the people who supported it.

And don’t buy into the bizarre hype that the bill might’ve passed had it been called for a vote in the House. It wasn’t gonna happen. The roll call was going the other way fast by the end of the spring session.

There are just so many rumors about this bill. Almost none of them are true, and most have been spread by well-intentioned folks with little to no experience differentiating idle Statehouse gossip from fact.

For instance, the rumor mill was rampant about a vote occurring on May 30, the day before the session ended. But the truth is that the bill lost crucial momentum a few days before when it became known that a prominent House Republican who’d been leaning toward voting “Yes” had switched to a firm “No.” It was the first time that the supporters publicly lost a backer, but it wouldn’t be the last.

The groups supporting the marriage bill hadn’t bothered to do any real ground work in African-American districts, so some initially sympathetic black legislators found themselves targets of a ferocious and well-funded counterattack from their churches. The pro-marriage equality groups didn’t even hire any House-affiliated black lobbyists until the last two days, but by then it was just way too late.

Look, plenty of mistakes were made on this bill. But nobody made those mistakes out of malice.

The attacks on the bill’s House sponsor, state Rep. Greg Harris, are particularly out of line. Nobody, and I mean nobody, wanted that bill to pass more than Harris did. He is widely respected as a competent legislator. But the Statehouse game is a lot like baseball. No one has a perfect batting average.

House Speaker Michael Madigan made some crucial errors, for sure. The vote probably should’ve been held much earlier in the session, before the opposition ramped up. But an honest person cannot tell you for sure that it would’ve passed back then. And, besides, I kinda doubt Madigan will be at the parade.

Gov. Pat Quinn claimed in early May that the bill had enough votes to pass, but his headcount was discovered to be bogus. His was just another false rumor which ultimately helped poison the well. Despite his bungles, Quinn means well on this issue, too. No sense in booing him.

If you want to heckle somebody, then pile some friends in a van and head to a parade in a House district represented by somebody who opposes gay marriage. That probably won’t do a lot of good, either, but at least the anger will be properly focused.

State Senate President John Cullerton (D-Chicago) told the Sun-Times on Thursday that he was willing to call same-sex marriage for a vote — for a second time — if that meant it would boost momentum in the Illinois House.

“Inaction is in the House,” he said when asked whether the Supreme Court’s landmark ruling would spur action in Springfield. The state Senate passed same-sex marriage on Valentine’s Day. But the House adjourned on May 31 without calling the measure for a vote.

`”I am working with the House sponsor to see if there’s anything that I can do,” Cullerton told the Sun-Times, who caught up with the lawmaker after a City Club of Chicago luncheon where David Axelrod headlined. “If they want us to repass the bill which would require another vote in the Senate with a changed effective date. If that would help, we’d be more than happy to try to do that.” […]

“Usually the second chamber, it’s easier to vote for a bill because your senator has already voted for it. A lot of people have said we’ll wait to see what the U.S. Supreme Court, well they’ve acted. This is such an inevitability, figure it out guys. Let’s get this done.”

Gay rights groups say they think the votes are there for a win at a brief legislative session this fall.

Maybe. Maybe sooner. Maybe later. But I still don’t think that this thing will get a vote in the veto session, which would be during the candidate filing process.

* Related…

* Mark Brown: Illinois needs to finish what Supreme Court started: What was really going on was that Republican strategists had identified the threat of gay marriage as a wedge issue that could be used to motivate conservative voters to come out more strongly in that November’s national election. Democrats meekly went along to blunt the impact. The Illinois bill’s chief sponsor, a young state senator named Peter Fitzgerald, went so far as to close the debate with a story about a third-grade boy adopted by two gay men. “Every day this boy is dropped off at school by his parents, and the other kids make fun of him. And he’s constantly crying. He’s in the principal’s office. He’s constantly fighting,” Fitzgerald said disapprovingly, offering his story as an argument in favor of further discrimination against gay couples. How wonderful then that the Supreme Court observed quite the opposite in the impact of the Defense of Marriage Act.